DENT And Ors V HERBERT CA CA 243/O2 18 June 2003
IN THE COURT OF APPEAL OF NEW ZEALAND
CA 243/O2
BETWEEN HENRY DENT AND VERA DENT
First Appellant
AND JANE MAREE PORTER
Second Appellant
AND COLIN FRANCIS HERBERT
Respondent
Hearing: 9 June 2003
Coram: Blanchard J
Panckhurst J
O'Regan J
Appearances: G D Wiles for Appellants
A J Davis for Respondent
Judgment: 18 June 2003
JUDGMENT OF THE COURT DELIVERED BY O’REGAN J
[1] The second appellant, Ms Porter, sought summary judgment against the
respondent, Mr Herbert, for specific performance of a put option agreement dated 1
August 2001. In the High Court Master Sargisson declined the application and the
appellants now appeal to this Court against that decision.
Facts
[2] At the instigation of their son, Mark Dent, the first appellants, Mr and
Mrs Dent, entered into an arrangement with Wilson Neill Corporation Ltd (Wilson
Neill), under which they agreed to advance $250,000 to Wilson Neill. The terms
were:
1. The advance would be secured by the transfer to Mr and Mrs Dent or their nominee of 12,500 ordinary shares in Wilson Neill at a price of 2c per share.
2. Wilson Neill would ensure that these shares would be
transferred to Mr and Mrs Dent by the respondent, Mr Herbert, who was a major shareholder in Wilson Neill and had formerly been a director;
3. The transfer from Mr Herbert would be for a total
consideration of $250,000, and would be subject to a put
option under which Mr and Mrs Dent would have the right to
require Mr Herbert to buy the shares back at a price of 2.5c per share, making a total of $312,500. This right had to be
exercised by a notice in writing, given at any time between 30
November 2001 and 14 December 2001, and settlement was to occur five days after receipt of the notice. Title to the shares was to be transferred to Mr and Mrs Dent or their nominee.
[3] The obligations of Mr Herbert under the put option were to be guaranteed by Wilson Neill. In fact, Wilson Neill contracted with Mr Herbert to satisfy his obligations under the put option agreement when called upon to do so. It also agreed to pay him a fee for his involvement in the arrangement.
[4] For reasons which will become apparent later, Mr and Mrs Dent appointed Ms Porter, who is their daughter and a chartered accountant, as their nominee and the letter evidencing the put option arrangement was therefore a letter from Mr Herbert to Ms Porter. The letter was on Wilson Neill letterhead. The text was as follows: Re: Purchase of Wilson Neill Corporation Limited shares From [sic] I confirm that I will sell to you, today, twelve million five hundred
(12,500,000) ordinary Wilson Neill Corporation Ltd shares at 2 cents per share for a total consideration of $250,000.00.
I hereby grant you the right to put the 12.5 million shares back to me at 2.5 cents per share (being an aggregate consideration of $312,500.00) by notice in writing at any time during the period commencing 30 November 2001 and
ending 14 December 2001, with settlement to occur within 5 working days of receipt of the notice in writing of the exercise of the put. I direct that you pay the purchase price of $250,000.00 to Wilson Neill Corporation Ltd.
Please acknowledge your acceptance of the terms of this agreement by signing below.
[5] The letter was signed by Mr Herbert as vendor and Ms Porter as purchaser. Mr Herbert also signed a securities transfer form, although some essential details such as the name of the issuer and description of the securities were left blank. Ms Porter entered her details as transferee and signed the transfer form.
[6] The put option letter and the transfer form were delivered to Ms Porter by Mark Dent. Ms Porter said she expected him or someone else at Wilson Neill to arrange for the shares to be registered in her name.
[7] Wilson Neill also sent to Ms Porter a copy of a letter from Wilson Neill to Mr Herbert which outlined the arrangements between them in relation to the loan. The text of that letter was as follows: Re: Loan to Wilson Neill Corporation Ltd
Wilson Neill Corporation hereby acknowledge that in consideration of you selling 12.5 million shares to Jane Porter and directing that the purchase price be paid to the Company, that the Company (WNC) owes to you an amount equal to the greater of $250,000.00 (being the purchase price) or if
the put option is exercised by Jane Porter, the amount of the consideration payable by you under the put option.
Wilson Neill Corporation will either:
1) If the put option is exercised, at your direction satisfy your
obligation under the put option or:
2) If the put option is not exercised by 14 December 2001 and unless otherwise agreed by you, pay you the sum of $250,000.00 in satisfaction of the debt owing by Wilson Neill Corporation to you within 5 working days of 14 December 2001. Provided however the debt may be satisfied at your option and on demand by the provision of 12.5 million shares in Wilson Neill Corporation by the Company (together with any cash differential payable should the put option
be exercised). Wilson Neill Corporation agrees to pay you an establishment fee of $2,500.00 for providing this service to the company.
[8] This was sent to Ms Porter by Phil Vosper of Wilson Neill. In addition, Mr Vosper sent to Mrs Dent a deposit slip for the account of South Pacific Hospitality Ltd, (South Pacific) a subsidiary of Wilson Neill. The $250,000 advance was
deposited to that account.
[9] Wilson Neill was in some financial difficulty at the time the advance was made and matters did not improve. After consultation with Mr and Mrs Dent, Ms Porter decided that the put option should be exercised, and sent a notice
exercising the put option to Mr Herbert on 4 December 2001. Mr Herbert did not respond.
The proceedings
[10] The appellants then commenced proceedings against Mr Herbert and against Wilson Neill and South Pacific. However, by the time of the hearing Wilson Neill had gone into liquidation and the applications in relation to it and South Pacific were not pursued. Ms Porter sought specific performance of the put option agreement. The shares, the subject of the agreement with Mr Herbert, had not been registered in Ms Porter’s name so the orders sought included an order that Mr Herbert transfer the shares to her and then pay $312,500 in return for a subsequent re-transfer of the
shares back to him. In the alternative, judgment for $312,000 was sought.
[11] Counsel for the appellants, Mr Wiles, said only the latter was now sought, given the futility of transferring and retransferring shares and the complications caused by the fact that Wilson Neill is now in liquidation. Grounds of opposition
[12] In the High Court in an affidavit, Mr Herbert accepted the basic facts outlined above, but contended that the put option was part of a broader composite arrangement which involved Mark Dent and various entities associated with him.
He pointed to an agreement dated 26 June 2001, under which Pegasus Trustees Limited (Pegasus), agreed to act as agent for Genesis International Charitable Trust (Genesis), to arrange for Genesis to buy 46% of the ordinary shareholding of Wilson
Neill. Thirty-one percent was to be purchased at 4.9c per share and 15% at 10c per share. The agreement was conditional on Genesis obtaining funding, but was
voidable if that had not happened by 1 September 2001. Genesis’s obligations were guaranteed by Mark Dent and a business associate of his, Alan Merrie.
[13] Mr Herbert said that he had entered into an unconditional agreement to sell about 56 million shares in Wilson Neill, belonging to him and associates, to Pegasus for 10c per share. The agreement between Genesis and Pegasus was amended on four occasions. One of the amendments extended the settlement date to 23 July 2001, but settlement had not occurred as at 1 August, so Genesis was in default at
the time the put option agreement with Ms Porter was entered into. The Genesis/Pegasus agreement was further amended on 23 November 2001 to provide for settlement on 30 November 2001, but this did not occur either.
[14] Mr Herbert said that the default by Genesis in settling the purchase of shares meant that Wilson Neill did not receive $310,000 which it anticipated receiving as a result of the settlement of the Genesis transaction. Wilson Neill had significant liquidity problems and Mark Dent agreed to arrange for short term funding. Mr Herbert said that Mark Dent told him he had authority to arrange a short term
loan from Mr and Mrs Dent and that he, Mark Dent would underwrite this. He said Mark Dent’s secondary motive was to obtain a block of shares for Mr and Mrs Dent on favourable terms, so that they could benefit from the takeover Mark Dent was organising. Mr Herbert said Mark Dent agreed on behalf of the first and second appellants to a transaction, under which Mr Herbert granted the put option, but with a full indemnity in favour of Mr Herbert from Mark Dent.
[15] Mr Herbert said it was specifically agreed that the put option would be exercisable only after full settlement had been made in respect of the Genesis transaction, and that such settlement was therefore a condition precedent to the
exercise of the put option. He said the transfer of shares to Ms Porter on behalf of Mr and Mrs Dent was pre-delivery of shares which later he would have become bound to transfer for the purposes of the Genesis transaction.
[16] In addition, Mr Herbert argued that the transfer of shares, pursuant to the put option, would breach the Takeovers Code. He argued that Wilson Neill was a code
company, Mark Dent held more than 20% of the equity securities in Wilson Neill, and so any transfer to an associate to Mark Dent (he said Ms Porter was an associate
because she was Mark Dent’s sister), would be valid and effective only if Mark Dent made a similar offer of securities to the other shareholders in Wilson Neill.
[17] Mrs Dent, in an affidavit, denied that Mark Dent had acted as agent for Mr and Mrs Dent and that he had authority to include a transaction on their behalf which was conditional on completion of the Genesis transaction, which she and her
husband had no involvement in. Mark Dent also denied agreeing to such a condition, and also denied that he had agreed to indemnify Mr Herbert.
[18] Mark Dent already held shares in Wilson Neill, and was involved in the Genesis transaction. In an affidavit he said he was asked by Mr Vosper of Wilson Neill to arrange for the shares to be purchased from Mr Herbert, not to be held in the
Dent name, given Mark Dent’s involvement in the Genesis transaction. That is why Ms Porter became involved. Mr Herbert said Ms Porter’s involvement was because
Mr and Mrs Dent knew Mark Dent held over 20% of the voting securities in Wilson Neill and that Mr and Mrs Dent and Ms Porter were involved in a “charade”. They denied this.
The Master’s judgment
[19] The Master traversed the facts and set out the principles applying to summary judgments under R 136. No issue is taken with that statement of principle. Having reviewed the evidence, she noted that the dispute about the nature of the transaction was further clouded by the evidence of Mr Vosper of Wilson Neill. He denied that Wilson Neill had concluded any loan or other agreement with the appellants, and said there was never any intention to enter into an agreement with them, but did not explain why he had sent a copy of the letter to Mr Herbert from Wilson Neill to Ms Porter, which is headed ‘Loan to Wilson Neill Corporation Limited’, and the text of
which is set out in paragraph [7] above.
[20] The Master noted that Mr Herbert had not explained why there was no reference in either the Wilson Neill letter or the put option letter, to any indemnity by Mr Dent, or to any condition that the put option would not be exercised unless and until the Genesis transaction settled. She said that Mr Herbert had not given evidence in any detail to support the existence of a representation from Mr and Mrs Dent that their son, Mark Dent, was their agent and had authority to negotiate on those terms. However, she decided that full disclosure and cross-examination of deponents was necessary to get to the bottom of the factual issues and disputes and therefore declined summary judgment.
[21] In relation to the Takeovers Code argument, the Master had accepted that Wilson Neill was a code company and that there was disputed evidence that Mark Dent was beneficial owner of more than 20% of the voting shares in the company – Mr Dent had deposed that his beneficial entitlement was to only 8.3%. She said it was arguable that Mr and Mrs Dent (and their nominee Ms Porter) and Mark Dent were acting jointly or in concert in terms of R 4(1)(a) of the Takeovers Code or were subject to R 4(1)(d) by reason of their personal relationship in the circumstances of the case. Again, she thought this issue could be safely resolved only with the benefit of a trial.
[22] The Master rejected a further argument on behalf of Mr Herbert that the put option agreement was frustrated/terminated and this has not been the subject of
appeal in this Court.
Appellants’ arguments
[23] Mr Wiles for the appellants argued that the Master had erred in failing to make an assessment as to whether a sufficient evidential foundation was established
by Mr Herbert’s bare allegations made in support of his defences. He argued that the Master had not viewed the situation in an appropriately robust and pragmatic way.
He said Mr Herbert’s evidence fell squarely within the remarks in Eng Mee Yong v Letchumanan [1980] AC 331 at 334 where Lord Diplock had commented that a
Judge was not required to accept uncritically as raising a dispute of fact, every statement in an affidavit “however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be”.
[24] Mr Wiles submitted that Mr Herbert’s assertions about the nature of the transaction should have been rejected. In particular he highlighted the following:
a) The put option letter and the Wilson Neill/Herbert letter were clear in their terms and supported the appellant’s contention as to the nature of the transaction. It was highly unlikely that an experienced businessman such as Mr Herbert would have allowed what he considered to be key components of the transaction (the indemnity from Mark Dent and/or the condition precedent tying the put option to the Genesis transaction) to be omitted from the documentation;
b) The documentation for the Genesis transaction was modified in November 2001, and there was no reference in that modification to the fact that the shares sold by Mr Herbert to Ms Porter were a predelivery of shares for the Genesis transaction, or that the put option arrangement involved a partial settlement of the Genesis transaction;
c) The condition precedent contended for by Mr Herbert rendered the put option arrangement useless. If the put option could not be exercised until the Genesis transaction had taken place it would not be exercised at all, given the Genesis transaction involved the purchase of shares for a considerably higher price than could be obtained by the exercise of the put option. So the put option would not have provided any form of security to Mr and Mrs Dent in a practical sense. There would have been no reason for them to have entered into the put
option arrangement;
d) Mr Herbert’s version of events included an assertion that Mark Dent was acting as agent for Mr and Mrs Dent and had agreed to the condition precedent on their behalf, even though he had apparently omitted to tell them that he had done so. In effect, Mr Herbert was saying that Mark Dent has misled both him and Mr and Mrs Dent. Mr Wiles argued that there was no evidential foundation for this agency assertion.
[25] Mr Wiles argued in the alternative that evidence of any oral terms varying the put option agreement should have been excluded under the parol evidence rule, because the oral terms alleged by Mr Herbert were not capable of acting consistently
with the written terms of the put option agreement and were contradictory to those written terms.
[26] In relation to the Takeovers Code, Mr Wiles argued that the evidence did not provide a proper factual basis for the assertions that Wilson Neill was a code company, that Mark Dent controlled more than 20% of the voting shares in the
company, or that Ms Porter and Mark Dent were “associates” in terms of the Takeovers Code. He said there was nothing in the Takeovers Act 1993 or the Takeovers Code that rendered an acquisition or proposed acquisition of shares in breach of the Takeovers Code a “nullity” as suggested by Mr Herbert.
Respondent’s arguments
[27] On behalf of Mr Herbert, Mr Davis traversed the possible defences which Mr Herbert had raised in the High Court and argued that the Master had been right in declining summary judgment because the complex nature of the transaction meant that Mr Herbert’s defences could only be evaluated properly after a substantive trial. He said the appellants had accepted in their statement of claim that the arrangements
were partly written and partly oral, and this supported Mr Herbert’s contention.
[28] In relation to the Takeovers Code, he argued that Mr Herbert had raised a question of compliance with the Code which could be appropriately evaluated only at a substantive hearing.
Discussion
[29] The difficulty faced by Mr Herbert in relation to the agency argument is that, on his own evidence, there was never any direct communication between him and Mr and Mrs Dent. That meant there was no possibility that Mr and Mrs Dent could have represented to Mr Herbert that Mark Dent was authorised to act as their agent and to agree to the terms of the arrangement on their behalf. The only other witness
for the defendants in the High Court was Mr Vosper. He says nothing in his affidavit about any communication from Mr and Mrs Dent, expressly or impliedly, to the effect that Mark Dent was acting as their agent with authority to agree the unwritten terms referred to by Mr Herbert, although he confirms the facts set out in Mr Herbert’s affidavit “insofar as they relate to [Wilson Neill] and [South Pacific]”. On the face of it, that does not provide confirmation of Mr Herbert’s statements
about the role of Mark Dent in the transaction between Ms Porter and Mr Herbert. Both Mr and Mrs Dent and Ms Porter denied that Mark Dent was acting as their agent.
[30] The Master noted that Mr Herbert had not given evidence in any detail to support the existence of a representation from Mr and Mrs Dent that Mark Dent was
their agent. She said this came close to a failure to provide sufficient particulars of a critical element of the defence. Mr Wiles argued that there was no evidence at all, and that this was a fatal flaw in Mr Herbert’s case. We accept that submission.
[31] In Savill v Chase Holdings (Wellington) Ltd [1989] 1 NZLR 257, McMullen J said (at 305): It is not enough for a third party to show that he relied on the agent’s
representation that he had the authority of his principal. He must show that he relied on the representation of the principal that the agent had the necessary authority.
[32] At a substantive hearing, the onus would be on Mr Herbert to establish express or ostensible authority in order to resist summary judgment. It was necessary for Mr Herbert to raise a factual basis which suggested the possibility of
Mark Dent having authority to negotiate the unwritten terms and conditions on behalf of Mr and Mrs Dent. In our view he has failed to do so, because on his own evidence there was never any communication between Mr and Mrs Dent and him,
and there is no other evidence which indicates any possibility that Mr and Mrs Dent represented to Mr Herbert that Mark Dent was their agent. That means that Mr Herbert failed to establish a factual basis suggesting a possibility of Mark Dent
having authority to act as agent for Mr and Mrs Dent.
[33] Even if Mark Dent represented to Mr Herbert that the put option was conditional on settlement of the Genesis transaction, that condition could not be binding on the appellants, because there is no indication Mark Dent had any
authority to agree to it on their behalf. If Mark Dent did, in fact, make such a representation, or if he agreed to provide an indemnity to Mr Herbert, then those would be matters to be resolved between Mr Herbert and Mark Dent. It cannot,
however, affect Mr Herbert’s obligations to the appellants.
[34] In view of that finding, we do not need to consider the argument made on behalf of the appellants that the parol evidence rule should apply.
[35] We now turn to the issues raised in relation to the Takeovers Code. The Master accepted that the evidence established Wilson Neill was a code company at
the relevant time. She said there was a dispute as to whether Mark Dent held more than 20% of the voting rights in Wilson Neill at that time. Even if he did, the put option would not contravene the code unless Ms Porter and/or Mr and Mrs Dent were “associates” of Mark Dent.
[36] Mr Herbert suggested Mr and Mrs Dent/Ms Porter were “acting jointly or in concert” with Mark Dent (R 4(1)(a)), but Mr Davis accepted that could not be sustained if there were no valid legal link between the Genesis transaction and the
put option. Alternatively, Mr Herbert suggested they were associates because they had a personal relationship to the extent that they should, under the circumstances,
be regarded as associates (R 4(1)(d)). It is plausible that the family relationship between Mr and Mrs Dent and Ms Porter on the one hand, and Mark Dent on the other, could be sufficient to make them associates, but in order to establish a factual basis for a defence based on this provision, Mr Herbert needed to put forward evidence of the circumstances which could lead to Mr and Mrs Dent and Mark Dent being regarded as associates. In the absence of the alleged link between the present transaction and the Genesis transaction, there are no such circumstances alleged by Mr Herbert.
[37] Mr Herbert would still have to provide a factual basis for his argument that Mark Dent controlled 20% or more of the voting rights in Wilson Neill. A mere assertion that is the case, unsupported by any evidence (such as material obtained
from the share register, or by reference to other documentation), indicating Mark Dent had an interest, is in our view insufficient to provide a factual foundation. As
this Court said in Haines v Carter [2001] 2 NZLR 167 at 187:
A bald assertion that there is a defence but without any elaboration or detail is unlikely to be seen as raising an arguable defence for the purposes of resisting a summary judgment.
[38] We conclude that the arguments based on the Takeovers Code do not provide a basis for declining summary judgment. We therefore do not need to consider whether a breach of the Takeovers Code would invalidate the put option agreement.
Conclusion [39] We conclude that Ms Porter was entitled to summary judgment and we therefore allow the appeal. It was accepted by counsel that in the circumstances of this case, the appropriate course was to issue judgment against Mr Herbert for the sum owing pursuant to the put option agreement. We therefore give judgment to Ms Porter for $312,500 and interest calculated in accordance with the Judicature Act
1908 from 11 December 2001 to the date of judgment.
Costs
[40] The appellants are entitled to costs in the High Court which should now be fixed in that Court. The respondents must pay costs of $5,000 in respect of the appeal, together with reasonable disbursements of the appeal, including travel and accommodation costs of counsel, fixed if necessary by the Registrar.
Solicitors:
Bryan Gallagher, Pakuranga Auckland for Appellants
Clark Boyce, Christchurch, for Respondent

THE CROOKS ARE SHOWN IN RED THE VICTIMS IN LIGHT BLUE

COLIN HERBIRT STRIKES AGAIN AS A DUNEDIN COURT PUTS HIM INTO BANCRUPTCY

HERBERT EQUITIES VMAMFREDOS
HC AK CIV.2005-404-3679 26 June 2006
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV.2005-404-3679
BETWEEN HERBERT EQUITIES LTD
Plaintiff/Applicant
AND GEORGE SOCRATES MAMFREDOS
First Defendant/Respondent
AND GEORGE SOCRATES MAMFREDOS AS
TRUSTEE OF THE SAMRAYAT
FAMILY TRUST
Second Defendant/Respondent
AND ANNABELLE JANE MAMFREDOS
Third Defendant/Respondent
Hearing: 20 June 2006
Counsel: Simon W B Foote for Plaintiff/Applicant
Paul F Chambers for Defendants/Respondents
Judgment: 26 June 2006 at 3:00pm
RESERVED JUDGMENT (No.2) OF WILLIAMS J
This judgment was delivered by
Hon. Justice Williams
on 26 June 2006 at 3:00pm
pursuant to R 540(4) of the High Court Rules
……………………………..
Registrar/Deputy Registrar
Date: ……………………...
A. The applications by the plaintiff/applicant for its existing caveat not to lapse or that it be permitted to register a second caveat are both dismissed.
B. The defendants/respondents’ application for the plaintiff to provide security for costs is granted. Within 42 days of the date of delivery of this judgment, the plaintiff is to pay the sum of $25,000 into Court (or otherwise as the parties agree) or give security for that sum to the satisfaction of the Registrar. That payment or security is intended to provide security for the costs of the defendants up to and including the completion of all interlocutory matters between the parties including
these applications and discovery and inspection, following which, if thought appropriate, the defendants may seek further security. In default of compliance, the claim is stayed.

EDEN REFUGE TRUST V HOHEPA AND ANOR HC AK CIV-2003-404-539 15 February 2006
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
CIV-2003-404-539
BETWEEN EDEN REFUGE TRUST
Plaintiff
AND CHARLES HOHEPA
First Defendant
AND CHARLES FLETCHER
Second Defendant
Hearing: 15 February 2006
Appearances: Mr G Bogiatto for plaintiff
Mr A L Hassall QC for first and second defendants
Judgment: 15 February 2006
(ORAL) JUDGMENT OF ASSOCIATE JUDGE DOOGUE
Counsel:
Mr G Bogiatto, P O Box 106-120, Auckland
Mr A L Hassall QC, P O Box 19025, Hamilton
Solicitors:
Fletcher Law, P O Box 29, Hamilton
Preliminary matters
[1] The first issue that arose was whether or not both applications, application for
security for costs and application for representation under r 78, were to be dealt with today, 15 February 2006. Mr Hassall said that he did not expect to be called upon to argue the application for security for costs in the light of the minute of Associate Judge Abbott dated 9 September 2005 which appeared to contemplate that the r 78 hearing would be dealt with today only. I direct therefore that only the r 78 matter is to proceed today. The Registry is to allocate further time of the security for costs matter. It may also be that quite apart from anything else the security for costs application cannot be dealt with until the r 78 application has been disposed of.
Only at that point will the identity of any representative party be known. Only at
that point, Mr Hassall submits, will the opposing parties be in a position to
investigate the circumstances of the added party and come to a view as to whether or
not that person will be able to meet any order for costs without security being
ordered.
[2] The next matter concerns an affidavit which was couriered to the Court, I
understand, yesterday. This purports to be an affidavit of Charles Hohepa sworn on
9 January 2006. On its face it appears to be a document of the first defendant. It is
intituled as though filed by the former solicitor acting for the first defendant. The
former solicitor, Mr Nielson, was some time ago given leave to withdraw. His role
in the proceedings from that point has been that his premises continue to be the
address for service at which papers intended for Mr Hohepa the first defendant are to
be served.
[3] The affidavit is late. It does not seem to be in support of a notice of
opposition from the first defendant. I see no reason why it should be read and I
decline to read it.
Application for order under Rule 78
[4] The first plaintiff has sought an order pursuant to r 78.
(b) That Joanne Lydia Maletino seeks to be substituted in substitution of
Nancy Noa the second plaintiff.
[5] That application is opposed and I will shortly refer to the grounds set out in
the notice of opposition prepared and signed by Mr A R Hassall QC counsel for the
second defendant.
[6] The history of this matter is given in an earlier judgment of Associate Judge
Lang (as he then was) on 28 April 2004 and that should be referred to as well for
background leading up to the execution of the trust deed in 1962. I will make brief
reference to it though. The plaintiff wishes to add another plaintiff in the matter
because there may be some doubt as to which if either of the existing plaintiff and
another group of persons are entitled to any relief that might be forthcoming as a
result of these proceedings. The existing plaintiff through its counsel Mr Bogiatto
refers to the founding document, if I can call it that in these proceedings, which was a deed of trust executed 29 October 1962.
[7] I conclude that the evidence is sufficient for interlocutory purposes to
establish that a religious congregation calling itself the Peoples Worship and
Freedom Mission contributed funds towards the purchase of the property which is
the subject matter of the proceedings. That property was purchased by three persons
who declared themselves to hold the property as trustees. In paragraph 2 of the trust
deed it was provided:
2. ANY funds which may come into the hands of any of us arising from
the said property or from any disposition of the same howsoever shall
be paid and accounted for to the properly constituted executive
committee aforesaid of the said congregation or in the circumstances
contemplated in Clause 4 hereof disposed of as in that clause
provided.
[8] As I understand the position of the plaintiffs it is that the implication from
this and other provisions of the trust deed was that the trustees held the property that they had acquired beneficially for the Congregation. The plaintiffs say that that
Congregation in its contemporary manifestation is the plaintiff, Eden Refuge Trust.
That is because the Congregation, having become incorporated under the Charitable
Trusts Act 1957, thereafter changed its name to Eden Refuge Trust.
[9] Mr Bogiatto says there may be some doubt about whether or not following
the reasoning I have just outlined Eden Refuge Trust is the appropriate plaintiff to
obtain any judgment in these proceedings against the defendants. For that reason he
seeks alternatively to have the ability to obtain judgment in favour of the individuals comprising the Congregation. That is quite a number of people and rather than all of these people being named as parties in these proceedings the objective of bringing the present application is that one person of their number should be appointed. The affidavit material indicates that a person who has previously in contemplation as the representative is Nancy Noa is for various reasons no longer suitable or available.
Instead the plaintiffs want one Joanne Lydia Maletino to be appointed.
[10] The application is supported by an affidavit by Ms Maletino. The notice of
application seeks an order substituting Ms Maletino for Nancy Noa. The notice of
opposition opposes the making of the orders. Essentially the submissions made by
Mr Hassall in support of the notice of opposition take two broad forms. First he
says that appointment of a representative pursuant to r 78 is not appropriate in a case where damages are sought for tort. I interpolate that the second amended statement of claim apparently includes a claim against the second defendant based on
negligence. I infer that from the fact that the statement of claim recites that the
second defendant was subject to a duty owed to the first plaintiff. The pleading is
not entirely clear but I think Mr Hassall is right when he says that it would appear
that the statement of claim includes such a cause of action.
[11] Mr Hassall referred to the authority of Roche v Sherrington [1982] All ER
426 as being an authority which supported his submission. On the other hand Mr
Bogiatto referred to certain New Zealand authorities which are collected in the
McGechan Commentary to r 78. Prominent amongst those was R J Flowers Ltd v
Burns [1987] 1 NZLR 260.
[12] In my view the strictures against providing for representation in the case of a
tort claim probably do not apply with the same force in modern times. I do not
therefore view the nature of that form of action as being a stumbling block to
appointment of a representative.
[13] The second part of the defendant’s opposition concerns defects in the papers
which the plaintiff has filed. I agree that the affidavit evidence is quite inadequate.
In the first place I agree that there needs to be some thought given to who were the
members of the Congregation at the time when the entitlement to damages or
compensation arose. That is something that needs to be clarified in the affidavit.
[14] The affidavit is further defective in that it simply annexes a list of persons'
signatures but without adequate information about who they are. It seems to me that
what is required is an affidavit that identifies from the personal knowledge of the
deponent who the appropriate claimants are, identifies their membership of the group
as at the relevant date, verifies that those persons consent, lists their names in full and then cross-refers to any schedule containing signatures deposing with admissible evidence that that is the signature of the person in question and that the signature is plainly a consent to appointment of the representative.
[15] Mr Hassall has also exposed the additional difficulty that a number of
persons listed in the papers filed in support of the application seem to be infants.
Without deciding the matter it seems to me unlikely that the rules relating to the
entitlement of infant persons to be represented in Court proceedings can be
circumvented by appointment of a representative under r 78.
[16] Mr Hassall made a number of other criticisms of the form of the pleadings. I
accept that there is substance to what he says. The proceedings have been misintituled on a number of occasions. There is doubt about the standing of the
amended statement of claim. All these are unacceptable but would not be fatal to
the present application. However, in my view the present application cannot be
granted at the present time. It would be wrong in my judgment to adopt the course
urged by Mr Bogiatto which was to make the order subject to proper affidavit
evidence being filed. That in my view would put the cart before the horse.
[17] Rather than bringing the matter to a complete halt by dismissing the
application I am going to give the plaintiff a further opportunity to get the papers
into order. I am influenced in my decision to take that approach because it is going
to be necessary for there to be at least one further interlocutory hearing date in order to dispose of the application for security for costs that I referred to in the earlier part of this judgment. The application for an r 78 order will accordingly be adjourned.
The adjournment date will be the date that will be fixed for the continuation of the
hearing of the application for security for costs which is 6 April 2006 at 2.15 pm. In the meantime the plaintiffs will no doubt give consideration to whether the
application needs amendment and whether the affidavits need to be revisited.
[18] It would also be useful if at the renewed hearing counsel could give me some
assistance on the matter of costs in the case of an appointment of a person pursuant
to r 78. It is likely that there will be in the law reports previous orders which have included conditions which might be of precedent value. I am thinking particularly of what, if any, liability the representees have to indemnify the person representing them. Some further submissions in that area would be helpful.
Timetabling
[19] Mr Bogiatto does not consider that there are any further interlocutories
required with one exception and that relates to a deed of acknowledgement of debt
executed by the first defendant and drafted by the second defendant, which may or
may not be Exhibit G to the affidavit of the second defendant affirmed on 30 March
2005. If Mr Bogiatto wants to take that matter any further he is to file the
appropriate application and serve it within 21 days.
[20] Mr Hassall indicates that the second defendant is uncertain as to whether or
not his professional indemnifiers intended to extend cover to the second defendant.
This matter needs to be resolved. The second defendant is to file and serve any
application to join his insurers as a third party within 28 days. Counsel for the
second defendant further says that it may be necessary for the second defendant to
administer interrogatories. Any notice pursuant to r 278 is to be filed and served
within 21 days.
[21] At the present time I have in mind that a fixture will be allocated for this
matter in the week commencing 6 November 2006. Mr Bogiatto considered five
hearing days would be adequate and Mr Hassall, seven. I direct that seven days is to
be made available and if there is any alteration to the fixture date I will issue a
subsequent minute advising counsel.
Costs
[22] Mr Hassall seeks costs for today’s hearing. Mr Bogiatto says it should be
dealt with on the adjourned date. I think it is preferable to clear away the matter of costs now. The second defendant is to have costs of today’s hearing on a 2B basis.
Postscript [23] I have enquired about the availability of seven hearing days in the week beginning 6 November 2006 and the following week. Registry staff advise that a
seven-day hearing can be accommodated. I therefore confirm the fixture will
commence on 6 November 2006 with seven days allocated.
J P Doogue
Associate Judge

Wilson Neil Director Charged
Published: 01.11.2003
Former Wilson Neill director Phil Vosper has had a fresh charge laid against him by the Ministry of Economic Development’s National Enforcement Unit. He is charged that as a director of a public issuer, he failed to file financial statements or group financial accounts, together with the auditor's report, with the Registrar of Companies within 20 working days of 30 November 2001. Failure to do this constitutes an offence under section 38(b) of the Financial Reporting Act and carries a maximum fine of $100,000. Earlier charges under sections 10 and 36 of the Financial Reporting Act of failing to file Wilson Neill's 2001 results by the due date and a Companies Act charge relating to Wilson Neill's failure to produce an annual report have been dropped and the new charge laid in their place.
A former Wilson Neil director – Trevor Mason – pleaded guilty in the Dunedin District Court to two Financial Reporting Act charges in April this year and was fined $12,000. Wilson Neil filed its final accounts for the 15 months to 30 June 2001 nearly two months late in February 2002 and just two months before the company was liquidated. The accounts showed Wilson Neil was $24 million in debt. In sentencing Mason, Judge MacAskill commented there was nothing in the material before the court to suggest a causative link between Mason's breach of his obligations and Wilson Neill's ultimate failure. Article'>http://news.business.govt.nz/news/business/companies/article/1753?COMPANIESOFFICE=e47de7c93b594bf3a3d">Article source here

Friday, November 03, 2006

Wilson Neill linked to second probe 24.11.2000

By KARYN SCHERER

A twist of fate has seen hospitality company Wilson Neill linked with allegations of insider trading for the second time in a decade.

Seven years after it settled with its former managing director over allegations of insider trading, the company is looking for a new executive director following the resignation of Paul Hyslop.

Mr Hyslop's decision to resign yesterday came after the Herald won a legal battle to name him as one of three people interviewed by the Serious Fraud Office last year for insider trading.

However, his resignation may be short-lived. He has indicated he will put himself up for election again as a director at the company's next annual meeting.

He has also indicated he will continue to work for the company as an unpaid consultant, following strong shareholder support.

The Serious Fraud Office gagged the Herald from mentioning details about its investigation by subpoenaing reporters to reveal information they had about Mr Hyslop's actions in May last year.

The office has since confirmed it has closed its file on the case, and is not pursuing charges against any of the three people.

It has not said why, although Fletcher Challenge spokeswoman Ginny Radford said this week that she believed it was because it was doubtful whether current laws applied to any of those interviewed.

The Securities Commission has used the case to suggest New Zealand's insider-trading laws need to be rewritten to fall into step with those of other countries, such as the United States and Australia, which have much stricter regulations.

Commission chairman Euan Abernethy said this week that it had decided not to launch its own investigation into the incident, as that would take too long and it was more concerned about suggesting changes to the law.

He declined to comment on whether Mr Hyslop was fit to be a director.

According to the commission's report, all three people the Serious Fraud Office investigated bought Fletcher Paper shares "to some degree" around the time a Fletcher employee accidentally leaked confidential information 18 months ago.

Mr Hyslop told the Serious Fraud Office he had made a profit of $40,000, before brokerage fees, by manipulating the share price. He admitted in court this week he had been "motivated by greed."

It is now up to Fletcher Challenge or disgruntled shareholders to take action against those involved. However, Fletcher has signalled it has other priorities.

Ironically, the commission's report into the Fletcher incident cites the Wilson Neill case in its consideration of whether the law should be changed.

The case involved Dunedin hotelier Colin Herbert, who became Wilson Neill's managing director in 1985 after buying a major stake in the company.

The allegations of insider trading arose in 1991 after five shareholders, including Business Herald columnist Brian Gaynor, bought 14 million shares from Mr Herbert's company, Herbert Group. Mr Herbert settled the claims out of court in 1993.

Mr Hyslop, who joined Wilson Neill as a director in January this year, told the Herald in September that Mr Herbert had been a "great mentor."

According to Wilson Neill's latest annual report, Mr Hyslop was the company's fifth-largest shareholder as at May 25, with around 13 million shares.

He said yesterday that he had boosted his holding to around 20 million shares.

He is a director of more than a dozen companies, including Woodfield Investments, Radionet, Onthenet Networks and South Pacific Hospitality. Many are subsidiaries of Wilson Neill and Mr Hyslop has said he will also resign those directorships.

The former pilot and real estate agent was instrumental in Wilson Neill buying Radionet, a high-speed wireless communications business, this year.

It originally tried to back the business into Australian listed shell Mount Conqueror Minerals, but it is now hoping to do a deal with Jump Capital, whose shareholders include Sir Michael Fay and David Richwhite.

Jump Capital principal Leigh Davis said he would be "very surprised" if Mr Hyslop's resignation affected the deal.

Wilson Neill's other assets include the Cobb & Co restaurant chain and the Parnell restaurant Iguacu.

Its latest transformation comes about six years after the original Wilson Neill was placed in liquidation.

The new company rose out of those ashes with $4000 worth of computer equipment and no cash for its 1200 shareholders.

Today it has about 8500 shareholders, and there has been talk the company will seek to relist on the main board